Finance Project Part

Budget

Congratulations! You just graduated from College and are now entering your first post-college full-time position at Kettering Medical Center. Your annual salary is based on a rate of $24.00/hour, which works out to almost $50,000/year. Even though you will really get paid every two weeks, we’ll imagine that you get paid once a month. Your task with this project is two-fold. First, you must decide how much money to save into your retirement and health coverage. Second, you must create a budget based on your take-home pay.

Pre-tax (gross) pay once per month: $4167

Note: If you have a spouse, fill in their gross pay and retirement contributions in the budget. If you don’t have a spouse, leave these blank.

You have the option of deducting a few items from your pay without paying income tax on that money. These include your health insurance coverage, your HSA contributions, and any retirement contributions.

Please select your medical insurance option (either engaged or high deductible) and apply it according to your current family/household size. Pick just one option for medical insurance, for dental coverage, and for vision coverage. Choose what percentage you would like to contribute to your retirement. Subtract all of these numbers from your $1920 paycheck. Multiply this by 0.8 to get your take-home pay (you’ll pay around 20% in taxes). This final number will be how much you have each pay period to budget from. Use the Take Home Pay Calculator Excel spreadsheet to assist with these calculations.

Medical Insurance

You have to health plan options with KHN: The Engaged Plan and the High Deductible Health Plan. Once you choose which one, put the cost per pay period into cell B7 of the Budget tab of the Excel spreadsheet.

Note: The following numbers assume you complete the wellness screening.

Engaged (Just you): $73.67/month

Engaged (You + child(ren)): $197.17/month

Engaged (You + spouse): $244.83/month

Engaged (You + Family): $312/month

Deductible: $1250 (Individual) or $2250 (Individual + 1)

Note: With the Engaged plan, you cannot contribute to an HSA

HDHP (Just you): $106.17/month

HDHP (You + child(ren)): $257.83/month

HDHP (You + spouse): $299/month

HDHP (You + Family): $372.67/month

Deductible: $1750 (Individual) or $3250 (Individual + 1)

Note: With the HDHP plan, you will receive $500 ($1000 if you have child(ren)/spouse/family) in your HSA at the beginning of the calendar year.

You can contribute up to $2850 (Individual) or $5750 (Individual + 1) more to your HSA in the calendar year.

If you want to max the HSA out, you’d need to contribute $237.50 (Individual) or $395.83/pay period (Individual + 1). If you choose the high deductible plan and have chosen how much you would like to (or can) contribute to your HSA each pay period, put this value into cell B11 of the Budget tab of the Excel spreadsheet.

Dental (Low Option)

Individual: $4.33/month

Individual + 1: $8.66/month

Family: $15.17/month

Once you choose which one, put the cost per pay period into cell B8 of the Budget tab of the Excel spreadsheet.

Vision (Low)

Individual: $12.74/month

Individual + 1: $19.08/month

Family: $34.32/month

Once you choose which one, put the cost per pay period into cell B9 of the Budget tab of the Excel spreadsheet.

Retirement

In order to receive the maximum employer contributions and matching, you must contribute 4% of you salary to your 403(b). This equates to $166.68/month. Each percent you contribute is equivalent to $41.67. You are only allowed to contribute a whole number percentage of your salary, up to 80% of your annual salary, or $18,000, whichever comes first. Once you choose what percent to contribute, multiply that percent by $41.67 and put this amount into cell B10 of the Budget tab of the Excel spreadsheet.

Take-Home Pay

Your take-home pay is the $4167 minus your health insurance premium, dental premium, vision premium, HSA deduction (if you are eligible), and retirement contribution, with taxes taken out. Using the Budget Excel spreadsheet will calculate your take home pay. This is how much $ goes into your bank account each month.

Budget

Using your take-home pay, please create a budget to cover all of your monthly expenses. Note: Your goal is to “run out” of money each month through saving $ each month for things like a down payment, a car, a vacation, etc. Include each of the following in your budget (this list may not be exhaustive):

Tithe (10% of your gross salary) (Note: tithing is a religious choice, not an obligation. Your choice to include this is totally up to you.)

Rent (include renter’s insurance here)

Mortgage (include home owner’s insurance, mortgage, tax, and maintenance, itemizing all four)

Food

Car (gas, loan payment, insurance, maintenance)

Phone

Internet

TV service (cable/Netflix/Amazon TV/Hulu Plus)

Electricity

Gas/heat

Hygiene (haircuts/etc.)

Childcare (as needed)

Savings

Roth IRA

Clothes

Entertainment

Student loans

Credit card bill/s

Household (cleaning supplies, TP, etc.)

Travel

Technology gadget/s

After you have completed your monthly budget, look at cell N51. This is how much take-home pay you need to live on each year. However, some of your current expenses won’t be found in retirement, such as a Roth, childcare (they should be adults by the time you retire!), or life insurance. So, I have automatically removed such expenses for you “per year” expenses. This value is found in N54. Multiply this number by 25. That is your retirement number. This is how much money you need to have in order to retire with enough money to live out your days at the same level of existence as you do now. Once you have this much in your combined retirement accounts, you no longer have to work for a living! You certainly can still work, but at that point, your retirement is set! For instance, if you need $25,000 a year in living expenses, your retirement number is $625,000. If you only need $20,000 a year, your retirement number is $500,000. On the other end, if you need $40,000 a year, your retirement number is $1,000,000. In other words, the more frugally you live now, the sooner you can retire. Or the more lavishly you live now, the longer you have to work before you retire. The choice is up to you!

Retirement Choices (Use the “Retirement” tab of the Excel spreadsheet)

Working for KHN, you will have your retirement accounts through Fidelity, one of the leading retirement account providers. If you want the easiest method of maximizing your retirement growth, select the S&P 500 Index Fund. Over the lifespan of your working career, this fund will outperform almost everything you could possibly find during that time. Just never sell your shares. Buy and hold, then buy and hold some more.

Given how much you plan to contribute to your retirement, and how much your employer matches, select one option from the list below. Based on these two choices, use the attached spreadsheet to calculate how much your contributions will be worth 30 years from now.

Large Cap: Select the following Large Cap Index Fund to put 100% of your retirement contributions into:

Spartan 500 Index Fund (FUSVX): Lifetime growth: 9.77%, expense ratio: 0.05%

HSA Investing (Use the “HSA” tab of the Excel spreadsheet)

If you opted for the high deductible health plan, you have the ability to invest part of your HSA funds. In order to do so, you must choose 5/3 Bank as your HSA provider. You must also have at least $2000 in the cash account at all times. In other words, you can only invest beyond $2000. For example, if you have $3000 in your account, you can invest $1000. If you have $4000, you can invest $2000. Investing funds within your HSA costs $2/month, a very small fee over time.

Assume that you have $2000 in your HSA and begin investing all subsequent contributions. Similar to your retirement choices, select what combination of funds you would like to invest in, using the provided spreadsheet.

In cell B1, put in your contribution amount from your budget (Cell B11). In cell B2, place 41.67 if you are an individual, or 83.33 if you are an individual + 1 or family.

HSA Investing options

(Note: this fund is the original index fund!) Vanguard 500 Index Fund (VFIAX): lifetime growth: 10.72%, expense ratio: 0.05%

Retirement Projections

Now we will see if you will have enough to retire on after 30 years of labor! Follow the directions on the “Retirement Projections” tab to discover if you plan on saving enough for your retirement!

As you work through this tab, be sure not to make any changes to cells B2, B3, or B8. These cells are set up to automatically make calculations for you!

2. https://kc.instructure.com/files/57652112/download?download_frd=1This 's the spreadsheet link....